Chapter Five

Economic Development

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Growing the Indigenous business sector

"Economic development driven by local Aboriginal and Torres Strait Islander people is the key to developing strong and sustainable economies that can empower local residents and provide greater employment opportunities." - Kowanyama River House owner and founder, Thomas Hudson

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Former Sydney Swans player Michael O'Loghlin is passionate about being a role model for business success. Michael is pictured here with his colleague, General Manager, ARA Indigenous Services/CMC, Suzanne Grech at the 2017 National Indigenous Business Trade Fair Series.

Strengthening the Indigenous business sector

Aboriginal and Torres Strait Islander people have demonstrated they are highly successful in business – from small start-ups to large companies together employing thousands of Indigenous staff.

The number of Indigenous Australians going into business is growing rapidly – with a 30 per cent jump in the number of Indigenous Australians reporting that they were in business in 2016 compared to 2011, compared to a 1 per cent increase for non-Indigenous Australians. And these businesses are diversifying. For instance, Supply Nation-registered Indigenous businesses generated around $1.15 billion in revenue in 2014-15 across a range of sectors from construction to professional, scientific and technical services. Their revenues have been growing at an annual average rate of 12.5 per cent – the envy of any sector in the Australian economy.

The Australian Government recognises that encouraging more Indigenous Australians to consider a life in small business can drive economic development at the local level. Providing the right support ensures more Aboriginal and Torres Strait Islander people thrive in the business sector – and for this reason, the Government has implemented a range of integrated initiatives that balance demand‑side policies that create and drive opportunities for Indigenous businesses with supply-side reforms that build the capacity and effectiveness of businesses to capitalise on these opportunities.

The Indigenous Procurement Policy has been a game-changer, with Indigenous businesses winning Commonwealth Government contracts worth $594 million in its first two years of operation. This compares to just $6.2 million in Commonwealth procurement to Indigenous businesses since 2012‑13.

COAG leaders have been working together closely to support Indigenous economic development by strengthening their Indigenous employment and procurement policies. Recognising that governments hold significant levers through their public sector employment policies, government purchasing practices and government-funded infrastructure projects, COAG members have developed a national overview and report of jurisdictional Indigenous employment policies.

All states and territories have Indigenous employment strategies and Indigenous targets in the public service and most jurisdictions have made good progress in embedding Indigenous employment and supplier-use objectives within infrastructure projects. Jurisdictions are carrying out considerable and wide-ranging work to support Indigenous employment, education and training and the Indigenous business sector, including but not limited to: Indigenous entrepreneurs’ packages; Indigenous ranger programs; regional development initiatives, business directories; back to work, leadership and Indigenous trainee programs. COAG members are now considering how to better monitor performance and strengthen reporting to ensure all governments and the private sector are playing their part to support Indigenous economic participation.

In order for Indigenous businesses to continue to win a greater slice of the economic pie, Indigenous Business Australia’s Business Development and Assistance Programme and the Indigenous Entrepreneur Fund help build a coordinated and interconnected support system to build their capacity to meet the increasing demand for Indigenous-produced goods and services.

The Government will provide this through an Indigenous Business Sector Strategy that forms a 10‑year roadmap to help Indigenous entrepreneurs access vital business and financial support.

Key points

The Government is actively driving reform to increase Indigenous participation and aspiration in the Australian economy.

Indigenous businesses and people are shaping the design and delivery of economic policy.

There are opportunities land and infrastructure can provide for Indigenous groups and individuals.

Translating policy into action

Economic development through entrepreneurship

One of the most effective means to achieve financial and economic independence is through entrepreneurship. The flow-on benefits of greater Indigenous business ownership are significant, as they build family and community wealth, create employment, encourage the uptake of education, increase choice possibilities and open opportunities to engage with a globalised economy.

Backing Indigenous businesses means we are also getting more Indigenous Australians into work as Indigenous businesses are far more likely to employ an Indigenous jobseeker. For instance, Supply Nation-registered Indigenous businesses have an Indigenous employment rate of around 40 per cent compared to an Indigenous employment rate of around 0.7 per cent across all Australian businesses. The gains from greater business ownership and employment can bring investment and further economic access to Indigenous communities.

Greater opportunities and economic participation, more Indigenous-owned businesses and higher employment levels lead to better outcomes for Indigenous Australians in a range of areas, from health and education to safer communities, less insecurity and greater political participation. In addition, all of these outcomes lead to greater choices for Indigenous Australians – greater individual choice, greater intergenerational choice and greater community choice – to the point where Indigenous Australians have the same opportunities as any other Australians to exercise genuine choices about their own lives and communities, creating real economic independence.

The Commonwealth through Indigenous Business Australia and other programs has helped to build the supply of Indigenous businesses across the country for 40 years. Progress, however, had been slow. To drive economic independence, the Commonwealth began thinking differently about its role in drawing Indigenous businesses into the broader economy as a significant purchaser, and the ability to use that expenditure to support a social purpose.

Indigenous Procurement Policy

In 2015, the Government introduced the Indigenous Procurement Policy (IPP) to leverage the Commonwealth’s annual multi-billion-dollar procurement spend to drive demand for Indigenous goods and services, stimulate Indigenous economic development and grow the Indigenous business sector.

The IPP has three main components:

a target of 3 per cent of Commonwealth contracts that need to be awarded to Indigenous businesses each financial year;

a mandatory amount set aside for remote contracts and contracts valued between $80,000 ‑ $200,000; and

In its first two years, the IPP led to 956 Indigenous businesses winning $594 million worth of Commonwealth procurement on a value for money basis. This compares to just $6.2 million in 2012-13 under former policies.

The results from the IPP are helping change the nature of the Government’s engagement with Indigenous Australia, from a frame of disadvantage, welfare and dependency to economic empowerment, opportunity, aspiration and excellence.

Indigenous Grants Policy

This section will need to be updated once the IGP submission has been drafted. It is due to be considered by Government on 30 January 2018.

The Government is doing more to build demand for Indigenous led service delivery. The Indigenous Grants Policy (IGP) will be trialled with three Commonwealth Departments to see how best a greater share of the almost $15 billion in Indigenous-related grants can be directed to Indigenous businesses, individuals and organisations.

Indigenous‑led granting activities have a greater chance of achieving sustainable, long-term community, social and economic outcomes. They are designed so that Indigenous Australians have a greater say in the design and delivery of Commonwealth grants in their communities, which is central to positioning them to lead activities related to their economic agency.

The IGP trial reflects the Government’s commitment to continue to improve how we work with Indigenous Australians.

This potential strengthened role for Indigenous organisations, businesses and individuals is likely to have beneficial economic flow-on effects for local communities and improve service delivery. The principles of the IGP trial are:

The delivery of programs and activities that are intended to benefit primarily Indigenous Australians are designed by the Commonwealth and Indigenous Australians working together

The Commonwealth will preference Indigenous organisations to deliver grant-funded activities provided they can demonstrate they meet any relevant criteria, provide value for money and can deliver the desired outcomes. Using local Indigenous organisations ensures economic benefits flow back into communities and local Indigenous Australians are involved closely in decision‑making in the organisation, leading to better service delivery. Further, evidence suggests Indigenous organisations are more likely to employ other Indigenous Australians.

All individuals or organisations delivering grant-funded activities that are intended to primarily benefit Indigenous Australians should employ Indigenous Australians and use Indigenous suppliers, as well as demonstrate relevant local cultural competence. A key to improving service delivery is ensuring entities funded through Commonwealth grants are accepted within the communities in which they work, and have a sound understanding of local settings. Stakeholders have identified local cultural competence as a priority.

The trial includes an evaluation strategy that will assess the effectiveness of the implementation of IGP principals and determine the suitability of a broader rollout. This is an opportunity to demonstrate best practice and to learn from previous service delivery experiences that did not embed sufficiently robust evaluation into Indigenous programme design.

The Government intends to begin the IGP trial from July 2018.

Indigenous Entrepreneurs Package

As part of the 2016 election commitment, the Australian Government announced it would build on the success of policies like the Indigenous Procurement Policy by introducing a $115 million Indigenous Entrepreneurs Package. This is because a strong and prosperous Indigenous business sector is key to empowering Indigenous Australians – through job creation, financial security for families and communities, and contributing to the growth of local economies and the Australian economy broadly.

The Indigenous Entrepreneurs Package included three components:

a commitment to develop the first Indigenous Business Sector Strategy to provide Indigenous businesses with the support, finances and networks they need for their businesses to thrive;

a commitment to refocus Indigenous Business Australia’s business support program on early stage entrepreneurs across Australia; and

a $90 million Indigenous Entrepreneurs Fund.

We know there is growing opportunity for Indigenous businesses across the country. For Indigenous businesses to take up opportunities created by the IPP and emerging policy and sector opportunities, a coordinated and interconnected support system is required. The Indigenous Business Sector Strategy will provide the support the sector needs to meet the growing demand. The Strategy is a 10 year road map to help improve access to business and financial support for Australia’s growing Indigenous business sector. It has been designed in consultation with over 200 Indigenous businesses and sector partners.

The Strategy hinges around four themes: better access to business support, improved access to capital, stronger networks, and greater access to information. It will also look at targeted solutions for urban, regional and remote locations; and increasing the talent pipeline through youth and women.

The work of Indigenous Business Australia (IBA) and its Business Development and Assistance Programme supports the aims of the Strategy. The Australian Government has changed the funding arrangements for IBA to refocus more heavily on assisting early-stage entrepreneurs and start-ups. IBA has launched a new grant/loan finance package for start-ups, a new working capital product for businesses winning their first contracts and entered into new business support partnerships.

Over the past year, IBA has changed its business support program significantly. It recently launched its Start-Up Finance Package and a new working capital product. It has also entered into new accelerator partnerships offering start-up entrepreneurs who have innovative and scalable ideas access to experienced entrepreneurial development. As part of its work to better support the Indigenous business sector, the Government has worked with IBA to deliver a new Performance and Warranty Bond product to increase investment in Indigenous businesses, particularly in the fields of construction and engineering. IBA has also launched a new $50 million Indigenous Impact Investment programme to encourage impact investment in ventures that support Indigenous economic development.

The Indigenous Entrepreneurs Fund (IEF) is also supporting the Indigenous business sector, particularly in remote Australia through a dedicated business advisory service and grants for business plant and equipment.

These businesses have varied in size and experience from individual start-ups and family businesses, to small and medium enterprises and Indigenous corporations. Funding has been spread geographically across the country in regional and remote areas of most states and territories.

Access to the required business plant and equipment has been vital for these businesses that, for various reasons, have not been able to access commercial finance. The IEF support has freed up working capital within the businesses to enable them to employ local Indigenous people in sustainable jobs. For example, within some small businesses, additional apprentices have been engaged in skilled roles, which in turn provides them with the opportunity to one day own and run their own business. It has also enabled these businesses to play a more active role in supply-chain opportunities, tendering in their own right to win work that was previously out of reach.

With an improved asset base and greater potential to secure ongoing contracts, these businesses are now better positioned to be sustainable and more likely to be able to access commercial finance in the future.

By investing in today’s Indigenous businesses and entrepreneurs, the Government is fostering a generation who will build their own business knowledge, assets and wealth and demonstrate to young people that business is a viable option for them.

Supporting Indigenous economic development through infrastructure

The Australian Government has identified infrastructure as an area that can help with Indigenous economic participation, due to the scale of opportunities to enhance employment and business capability in both urban and regional Australia.

To support Indigenous Economic Development, the Commonwealth is working across all levels of Government and in collaboration with the private sector to increase Aboriginal and Torres Strait Islander participation in large scale government infrastructure projects. This includes through the Northern Australia White Paper, the Government’s City Deals, through COAG’s Indigenous economic development agenda and the development of an Indigenous Employment and Supplier‑Use Framework.

The White Paper on Developing Northern Australia outlines that projects funded through the $600 million Northern Australian Roads Programme and the $100 million Northern Australia Beef Roads Programme need to include Indigenous employment and procurement targets that reflect the local Indigenous working-age population.

City Deals are a new approach in Australia, bringing together the three levels of government, the community and private enterprise to create place-based partnerships and facilitate more investment and planning in infrastructure. Under the Government’s City Deals:

the lead contractor for the $250 million Townsville stadium will be targeting 6.6 per cent of the construction workforce to be Aboriginal and Torres Strait Islander people;

the details of an Indigenous employment target associated with infrastructure funding under the Launceston city deal are being developed;

the Department of the Prime Minister and Cabinet is working closely with the NSW Government on opportunities relating to the proposed Western Sydney deal; and

work has recently begun on deals for Darwin, Perth and Hobart.

Increasing Indigenous employment, economic participation and creating the right economic opportunities to increase demand for Indigenous businesses is also at the heart of COAG’s Indigenous Economic Development Agenda. All jurisdictions have agreed to establishing state and territory-specific Indigenous procurement policies, Indigenous employment and Indigenous business targets, and to strengthen their reporting mechanisms.

The Australian Government, led by the Department of Infrastructure and Regional Development, is also developing an Indigenous Employment and Supplier Use Framework. The framework will include a Commonwealth negotiating position for the new National Partnership Agreement on Infrastructure (2019-20) that will tie Commonwealth funding to the achievement of agreed Indigenous employment and supplier use targets.

Cape York Region Package

The $260.5 million Cape York Region Package is seen as a unique opportunity to address Indigenous economic, training and employment issues in the Cape York region. Tender documents relating to the $200 million Peninsula Developmental Road component of the package have included incentive payments for targets relating to Indigenous training and employment, Indigenous economic opportunity and local industry participation. The targets for 2016 were exceeded.

In addition, $50.5 million of the $260.5 million available under the Cape York package has been allocated to upgrade priority transport and non-transport infrastructure in remote communities. Importantly, these projects are being delivered by the local and Indigenous Shires and will sustain ongoing employment for the local and Indigenous workforce.

Importantly, these projects are being delivered by the local and Indigenous Shires and will sustain ongoing employment for the local and Indigenous workforce.

Land rights

Land rights, including native title have made a significant contribution to achieving economic, social and cultural outcomes and ensuring sustainable intergenerational benefits for Indigenous communities over the past 10 years. As at 30 June 2017, Indigenous Australians’ rights and interests in land were fully recognised across more than 40 per cent of the land area of Australia. This included native title determinations over approximately 34 per cent of Australia, with a further 26 per cent of Australia subject to application for recognition of native title rights. Native title has been determined to exist over approximately 32 per cent of Australia. This is a significant increase from 2007, where native title was determined over approximately 9 per cent of the country.

In the past 10 years the vast majority of native title determinations have been made by consent rather than often protracted and expensive litigation. A key lesson from native title has been the importance of agreement-making for securing positive outcomes for Indigenous people and the community. Institutional reforms to improve the case management of claims by the Federal Court in 2009 also saw a threefold increase in the number of native title claims settled by consent determinations in 2010-11 (27) compared to 2009-10 (nine). The Government is currently considering a range of recommendations to improve the effectiveness of the native title system to resolve claims, better facilitate agreement-making around the use of native title land (including to improve the ability of native title holders to do business on their land) and promote the autonomy of native title groups to make decisions about their land and to resolve internal disputes.

Economic opportunity through native title

Although many communities have benefited from native title arrangements, the Government recognises the difficulties communities can face when attempting to use their land for commercial gain. Indigenous Land Use Agreements (ILUAs) and other Native Title Agreements are a mechanism by which native title holders can negotiate economic outcomes in return for the use of traditional land and waters. As of 13 September 2017, 1,186 ILUAs had been registered, providing a range of social and economic benefits for communities around Australia. An ILUA can record the consent of native title parties to dealings on native title land and comprehensively settle one or more native title disputes.

The Yawuru agreements finalised in 2010 between the Yawuru People, the Western Australian Government and the Shire of Broom, for example, include $56 million in monetary benefits for the Yawuru for capacity building, preservation of culture and heritage, economic development, housing and joint management of a proposed conservation estate.

Comprehensive settlements have increased in prominence in recent years. These settlements involve the resolution of one or more native title claims over an area and other broader issues, such as compensation and have supported long-term economic opportunities for Indigenous communities, as well as heritage management. Comprehensive settlements promote faster, sustainable outcomes and can provide long‑term economic development opportunities for Indigenous communities.

The Government is also exploring ways to support greater Indigenous-led economic activity on native title land through leasehold arrangements.

Commonwealth support for native title

The Australian Government provides approximately $90 million in funding to Native Title Representative Bodies and Native Title Service Providers annually. These organisations assist Indigenous people in resolving native title claims and managing native title related issues.

The Government funds the Federal Court and the National Native Title Tribunal which handle native title claims. In 2017-18, total funding for the Federal Court is $74.9 million of which approximately $10 million has been provided to the National Native Title Tribunal.

The Government also provides funding to assist mid to senior-level anthropologists to become expert anthropologists. Native title anthropologists play an important role in the native title system, often providing fundamental connection evidence in native title claims.

Native title corporations

As the number of determinations rises, so too does the number of native title corporations established to hold and manage native title on behalf of the native title group. There are currently more than 170 corporations, more than three times the number that existed 10 years ago. In 2015, the White Paper on Developing Northern Australia recognised for the first time the need for direct funding to build the capacity of these corporations. This ongoing funding ($20.4 million over four years) is currently being applied to a number of nationally available support measures, as well as in response to application by specific corporations.

NBN Co Limited’s Sky Muster Satellite Service

Many of Australia’s remote Indigenous communities will be served by NBN Co Limited’s Sky Muster satellite service.

The National Broadband Network will assist businesses in these areas to improve their productivity, reduce costs and access new markets. The satellite service will provide broadband internet access with enough capacity to provide for services from basic web browsing and banking transactions through to more advanced applications such as e-health services and distance education.

As of 14 December 2017, there were more than 83,000 premises connected to the Sky Muster service.

There are currently 92 Indigenous community organisations receiving Sky Muster services through NBN Co’s Public Interest Premises programme. The Northern Territory has the highest number with 37 Indigenous organisations.

Indigenous Visual Arts Industry Support programme

Australian Indigenous visual art is internationally recognised and sought after for its quality, innovation and cultural richness. The Australian Government invests around $20 million annually in Australia’s Indigenous visual arts industry through the Indigenous Visual Arts Industry Support program. The program provides operational support to around 80 Indigenous‑owned art centres, mostly in remote communities, as well as a number of service organisations, art fairs and regional hubs. Together these organisations enable the development, production and marketing of Indigenous visual art, and provide professional opportunities for around 8,000 artists.

Increasing overseas opportunities for Indigenous businesses

Australia is working to improve Indigenous Australians’ economic prosperity by creating opportunities for greater access to, and participation in, the global economy.

The Australian Government has recently announced a Charter with Indigenous Australian businesses: Promoting the Economic Interests of Australian Businesses Overseas. The Charter, available on the Department of Foreign Affairs and Trade website, provides practical information to help Indigenous Australian businesses optimise opportunities to engage with international markets and investors, and participate fully in the global economy.

Complementing this, the Government is exploring ways to work with the Indigenous business community to increase opportunities for export ready businesses to access international markets, including through participation in international business delegations.

Torres Strait fishing

The Australian Fisheries Management Authority (AFMA), under a financial agreement with the Torres Strait Regional Authority, coordinates and supports attendance by Torres Strait Islander and Aboriginal traditional and commercial fishers on three fisheries working groups, one management advisory committee and two resource assessment groups. AFMA is delegated by the Protected Zone Joint Authority (PZJA) to provide day-to-day management, including the development of policies and plans of management for the management of Torres Strait fisheries. These various advisory committees provide the means for direct engagement with Indigenous stakeholders and is a primary source of policy and management advice for the PZJA.

The PZJA has applied a number of management policies designed to benefit Indigenous Torres Strait Islander communities. Only Indigenous Torres Strait Islander people are eligible for the grant of a new licence to fish in any Torres Strait fishery. As a result of Government-funded adjustments, the Torres Strait Finfish and Bêche-de-mer fisheries are only accessed by either Indigenous Torres Strait Islander people or other fishers permitted under special leasing arrangements recommended by an Indigenous advisory body. All revenue gained from leasing is held in trust by the Torres Strait Regional Authority for the benefit of Torres Strait communities.

Australian Government legislation came into effect on 7 November 2017 ensuring AFMA takes account of the interests of all fisheries users, including Indigenous and recreational fishers, in the management of Commonwealth fisheries. (The Fisheries Legislation Amendment Bill was passed by the House of Representatives on 26 October 2017 having been previously passed by the Senate. Royal Assent was given on 6 November 2017.) This legislative amendment gives effect to a 2016 election commitment to strengthen the voice of Indigenous and recreational fishers in the management of the Commonwealth’s commercial fisheries.

Biosecurity

The clean, pest and disease free status of Australia is one of our greatest assets and gives us a competitive edge in a global market where quality and safety is highly valued. The Government has invested $200 million in biosecurity measures across Australia to our protect farmers and all Australians. It includes support to ensure our northern barrier remains intact. The Government is investing $12.4 million to expand biosecurity activities in northern Australia undertaken by Indigenous ranger groups. Sixty-nine skilled ranger groups are now playing a vital biosecurity role, with many located along coastlines in very remote areas.

Local solutions

Kowanyama river house growing to new heights with IAS funding

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Kowanyama River House owner and founder, Thomas Hudson, is expanding his Indigenous tourism business on the Cape York Peninsula of Far North Queensland.